FTSE 100: green shoots in banking, mining and travel?

by Alistair Strang from Trends and Targets |

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These areas of sleepy index could be starting to rise, with 20% possible for banking.

FTSE for Friday (FTSE:UKX)

The last six sessions of the FTSE 100 have been epically boring, giving a maximum range of 46 points.

With everything going on in the world, surely the UK market does not need try too hard to find an excuse to actually do something. But, despite the failure of the FTSE to become interesting, we're curious about a couple of details which are otherwise unremarked upon.

Three sectors arouse our immediate interest: the banking sector, major miners, and travel & leisure. All three are starting to take a real interest in life, using the time when the FTSE is otherwise asleep to display early signs of considerable hope for the months ahead.

For instance, with the banking sector, we already see early suggestions of a justifiable 20% increase across share prices in the weeks ahead.

And with the miners, it's pretty easy to extrapolate a 12% average rise across sector share prices.

With travel & leisure we're slightly less confident, the markets perhaps exercising caution with Covid-19 vaccines. But in the event the sector index closes above 9,000 points we anticipate an initial 15% surge in prices, perhaps over 30% if confidence floods back.

It's obviously early days, especially as confidence has not yet leaked with sufficient force to nudge the FTSE. But perhaps things shall reach a critical mass, moving with enhanced speed once the vaccine program rolls out in early March with under-50s receiving the call to attend a clinic.

We’re also inclined to some near-term alarm thanks to whatever scared the pants off America on Thursday. With the S&P 500 down 2.5%, the Nasdaq down 3.6% and the Dow Jones experiencing a 1.8% drop, we suspect a bout of nerves shall leach across the Atlantic for Friday, provoking some reversals. At least, until the US opens for business!

When the US closed on Thursday, FTSE Futures were at 6,588, substantially below the UK markets closing price of 6,651 points.

As a result, it's probable the UK shall open solidly down on Friday morning, and this presents some major problems.

In the event the FTSE opens below 6,607 points, we suspect continued reversals to an initial 6,577 points with secondary, if broken, at 6,508 and hopefully a bounce.

The opposite scenario is quite strange, as should the FTSE open above 6,607, there's a chance of some insane and unexpected recovery toward 6,650 with secondary 6,701 points. It can be safely assumed we don't expect this, as it nudges the UK into a region where we can again discuss the possibility of future movements to 7,133 points and above.

Have a good weekend!

Source: Trends and Targets. Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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